NEW YORK – A renter most of his adult life, Clarence Swann became fearful that landlords would use the coronavirus pandemic as an excuse to gouge their tenants. So, with a desire to move near family, the retired veteran bought his first home last month at the age of 74.
Swann said he used his veteran status to get the loan he needed to buy a $196,000 townhouse this summer in the Lake Wylie, South Carolina area.
“The first need at my age was I wanted stability,” he said.
Swann is one of tens of thousands of buyers who dove into the housing market this spring and summer even as the coronavirus upended the U.S. economy. The presence of these buyers, plus a sharp drop in the numbers of homes on the market, drove home prices to record highs in most parts of the United States, according to an analysis of housing price data by The Associated Press and Core Logic.
The average home price in the U.S. in May rose 4.2% compared to a year ago. The data shows that prices for cheaper homes — those found in the lower third of prices in metropolitan areas and a typical target for first-time buyers — grew faster than the rest of the market, rising 6.7% from a year ago.
The coronavirus pandemic helped shape the housing market by influencing everything from the direction of mortgage rates to the inventory of homes on the market to the types of homes in demand and the desired locations.
The pandemic pushed the U.S. economy into a deep recession as many businesses shut down, which in turn forced the hand of the Federal Reserve to dramatically lower interest rates. The average mortgage rate fell from around 3.75% at the beginning of the year to under 3% in a matter of weeks after the pandemic struck the U.S.
That sudden drop in mortgage rates was an instant boon to home affordability, economists said, allowing many buyers to afford much more expensive homes while keeping the same monthly payments.